They called it “the overdraft” — a vast pool of distressed sub-prime loans that managers at Cattles delayed writing down so they could keep hitting their profit targets.

Compliance officials in Cattles’ lending subsidiary warned in 2006, two years before the FTSE 250 company hit the wall, that its habit of massaging debt was “unlawful”, according to a recent court filing.

But should Cattles’ auditors also have spotted that the West Yorkshire-based lender was lying to shareholders about the state of its loan book? The question is at the centre of a £1.6 billion lawsuit that Zolfo Cooper, Cattles’ supervisor, has